0% Down payment options have been around for some time. They are designed to help those people who have stable employment (Minimun 2 years) and reasonably good credit but have not been able to raise a down payment (Minimum 5%).

Mortgage insurers (CMHC and Genworth Financial) have programs for those people with excellent credit to obtain 95% financing with 5% cash back.  The criteria includes a requirement for a high credit score (680 and above).   

So just because your bank says no, doesn't mean that 0% down options are not available to you. There are lenders that will offer 95% financing with 5% cash back (to cover the down payment, or closing costs).

Your credit is important whether you have a down payment or you are looking for 100% financing.  Here are 5 tips to keep in mind to keep your credit score healthy. 

1.  Pay down credit cards.
The number 1 way to increase your credit score is to pay down your credit cards.  Revoling credit like credit cards seems to have a more significant impact on credit scores than car loans, lines of credit etc.  Ideally, your credit card balance should be below 30% of your limit.

2.  Limit the use of credit cards
Racking up a large amount and then paying it off in monthly instalments can hurt your credit score.  If there is a balance at the end of the month, this affects your score - credit formulas don't take into account the fact that you may have paid the balance off the next month. 

3.  Check credit limits
If your lender is slower at reporting monthly transactions, this can have a significant impact on how other lenders may view your file.  Ensure everything's up to date as old bills that have been paid can come back to haunt you.

4.  Keep old cards
Older credit is better credit.  If you stop using older credit cards, the issuers may stop updating your accounts.  As such, the cards can lose their weight in the credit formula.  Even though you have had the cards for a long time, you should use these cards periodically and then pay them off before the statement period closes.

5.  Don't let mistakes build up
You can have the credit agencies Equifax and Transunion correct any errors that may be in dispute.  Make the credit agencies aware, especially if a bill has been paid and not reported as such and still showing as outstanding.  It is easier and faster to contact the credit agencies directly than wait for the institution to correct it for you.

Your income is also an important factor, whether you are salaried, hourly, commission or self-employed. All lenders need to see that their debt can be serviced.  Typically, you will need enough income to not only pay the mortgage, taxes and heat, but also your other bills such as credit cards, lines of credit, loans etc.  A quick test would be to calculate between 42% - 44% of your gross income and see if all these payments would fall below that range. 

Contact us for a solution tailored to your needs.